The level of commercial/multifamily mortgage debt outstanding rose by $44.6 billion (1.1 percent) in the first quarter of 2021, according to the Mortgage Bankers Association’s (MBA) latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report.
Total commercial/multifamily debt outstanding rose to $3.93 trillion at the end of the first quarter. Multifamily mortgage debt alone increased $28.8 billion (1.7 percent) to $1.7 trillion from the fourth quarter of 2020.
“The pandemic-era growth in the amount of commercial and multifamily mortgage debt outstanding continued during the first quarter, but the growth was not evenly distributed,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “All of the major capital sources increased their holdings of commercial and multifamily mortgages during the quarter, but almost two-thirds of the overall growth came from multifamily properties, with 80 percent of that multifamily growth coming from federally-backed Agency and GSE mortgage-backed securities and portfolios.”
Woodwell continued, “As the uncertainty from the COVID-19 pandemic wanes, lenders will have greater clarity into the different properties and property types and be in stronger positions to make new loans.”
The four largest investor groups are: banks and thrifts; federal agency and government sponsored enterprise (GSE) portfolios and mortgage-backed securities (MBS); life insurance companies; and commercial mortgage-backed securities (CMBS), collateralized debt obligation (CDO) and other asset backed securities (ABS) issues.
Commercial banks continue to hold the largest share (38 percent) of commercial/multifamily mortgages at $1.5 trillion. Agency and GSE portfolios and MBS are the second largest holders of commercial/multifamily mortgages (22 percent) at $861 billion. Life insurance companies hold $588 billion (15 percent), and CMBS, CDO and other ABS issues hold $540 billion (14 percent). Many life insurance companies, banks and the GSEs purchase and hold CMBS, CDO and other ABS issues. These loans appear in the report in the “CMBS, CDO and other ABS” category.
MBA’s analysis summarizes the holdings of loans or, if the loans are securitized, the form of the security. For example, many life insurance companies invest both in whole loans for which they hold the mortgage note (and which appear in this data under Life Insurance Companies) and in CMBS, CDOs and other ABS for which the security issuers and trustees hold the note (and which appear here under CMBS, CDO and other ABS issues).
MULTIFAMILY MORTGAGE DEBT OUTSTANDING
Looking solely at multifamily mortgages in the first quarter of 2021, agency and GSE portfolios and MBS hold the largest share of total multifamily debt outstanding at $861 billion (50 percent), followed by banks and thrifts with $481 billion (28 percent), life insurance companies with $171 billion (10 percent), state and local government with $106 billion (6 percent), and CMBS, CDO and other ABS issues holding $53 billion (3 percent). Nonfarm non-corporate businesses hold $19 billion (1 percent).
CHANGES IN COMMERCIAL/MULTIFAMILY MORTGAGE DEBT OUTSTANDING
In the first quarter, agency and GSE portfolios and MBS saw the largest gains in dollar terms in their holdings of commercial/multifamily mortgage debt – an increase of $23.0 billion (2.8 percent). CMBS, CDO, and other ABS issues increased their holdings by $7.0 billion (1.3 percent), commercial banks increased their holdings by $6.8 billion (0.5 percent), and REITs increased their holdings by $4.9 billion (5.2 percent).
In percentage terms, REITs saw the largest increase – 5.2 percent – in their holdings of commercial/multifamily mortgages. Conversely, finance companies saw their holdings decrease 1.2 percent.
CHANGES IN MULTIFAMILY MORTGAGE DEBT OUTSTANDING
The $28.8 billion increase in multifamily mortgage debt outstanding from the fourth quarter of 2020 represents a 1.7 percent increase. In dollar terms, agency and GSE portfolios and MBS saw the largest gain – $23.0 billion (2.8 percent) – in their holdings of multifamily mortgage debt. CMBS, CDO, and other ABS issues increased their holdings by $1.4 billion (2.8 percent), and commercial banks increased by $1.4 billion (0.3 percent). Private pension funds saw the largest decline in their holdings of multifamily mortgage debt, down $65 million (11.1 percent). Finance companies saw the largest decline in their holdings of multifamily mortgage debt, down $59 million (1.1 percent).
MBA’s complete Commercial/Multifamily Mortgage Debt Outstanding report can be downloaded here: https://www.mba.org/news-research-and-resources/research-and-economics/commercial/-multifamily-research/commercial/multifamily-mortgage-debt-outstanding.
The report’s analysis is based on data from the Federal Reserve Board’s Financial Accounts of the United States, the Federal Deposit Insurance Corporation’s (FDIC) Quarterly Banking Profile, Trepp LLC, and data from Wells Fargo Securities. More information on this data series is contained in Appendix A.